Business, 15.04.2021 20:20, DesperatforanA

The bonds of the Lange Corporation are perpetuities with a 12 percent coupon. Bonds of this type currently yield 10 percent, and their par value is $1,000. Make sure to show your work. What is the price of the Lange bonds?

b Suppose interest rate levels rise to the point where such bonds now yield 14 percent.
What would be the price of the Lange bonds?

C. At what price would the Lange bonds sell if the yield on these bonds was 12 percent?

d. How would your answers to parts (a), (b), and (c) change if the bonds were not
perpetuities but had a maturity of 20 years?

Answers: 3

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The bonds of the Lange Corporation are perpetuities with a 12 percent coupon. Bonds of this type cur...